Well that was an underwhelming day after an open that had so much promise. After double bottoming yesterday and making a massive one day move the NAS ran into a brick wall of overhead resistance. The neutral zone was penetrated but could not be breached to the upside leaving price in the bear zone which means side ways to down price action. I've added a couple of downward trendlines defining an expanding wedge. The bears are hoping for a rejection off the top trendline and drop to the lower line. The bears likely see the current price action as a re-test of the head and shoulders neckline. The bulls want to see the upper trend line broken and today's high taken out. The bulls likely see the price action as a double bottom and reverse head and shoulder being formed. The longer term trend is still up but we have two paths to get there and one may require a deeper correction. I would expect a ton of buyers in the 618 zone. The challenge is to have enough cash on hand to take advantage of such a move. Let's see what happens.
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Here's another chart showing the two H & S patterns in play. One bearish, one bullish. Both straddling the same level.
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Got the break of yesterday's high so the bulls are winning for now. Price is now in the middle of the neutral zone and pushing toward the 618 fib. Be mindful that the 618 fib acts as magnet for price, but also as significant resistance.
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Yields spiked significantly so price has dropped again as people dump their growth names. The downward trend line is being re-tested. The bulls want the trendline to hold. The bears want the trend line to fail. I would feel more bullish if the yields had not jumped a whopping 6 basis points. As I have pointed out a few times. While price remains in the neutral zone it can still roll over and continue down.
